Covenant Transportation Group (CVTI) versus Canadian National Railway (CNI) Financial Contrast

Covenant Transportation Group (NASDAQ: CVTI) and Canadian National Railway (NYSE:CNI) are both transportation companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, dividends, profitability, analyst recommendations, earnings, valuation and risk.

Profitability

This table compares Covenant Transportation Group and Canadian National Railway’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Covenant Transportation Group 1.82% 5.30% 2.02%
Canadian National Railway 29.98% 25.57% 10.29%

Risk & Volatility

Covenant Transportation Group has a beta of 1.67, indicating that its stock price is 67% more volatile than the S&P 500. Comparatively, Canadian National Railway has a beta of 1.09, indicating that its stock price is 9% more volatile than the S&P 500.

Earnings & Valuation

This table compares Covenant Transportation Group and Canadian National Railway’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Covenant Transportation Group $670.65 million 0.81 $16.83 million $0.69 42.91
Canadian National Railway $9.11 billion 6.56 $2.75 billion $3.90 20.53

Canadian National Railway has higher revenue and earnings than Covenant Transportation Group. Canadian National Railway is trading at a lower price-to-earnings ratio than Covenant Transportation Group, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and price targets for Covenant Transportation Group and Canadian National Railway, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Covenant Transportation Group 0 3 1 0 2.25
Canadian National Railway 1 8 7 0 2.38

Covenant Transportation Group presently has a consensus price target of $23.50, indicating a potential downside of 20.63%. Canadian National Railway has a consensus price target of $81.00, indicating a potential upside of 1.16%. Given Canadian National Railway’s stronger consensus rating and higher probable upside, analysts clearly believe Canadian National Railway is more favorable than Covenant Transportation Group.

Institutional & Insider Ownership

63.3% of Covenant Transportation Group shares are held by institutional investors. Comparatively, 53.8% of Canadian National Railway shares are held by institutional investors. 35.2% of Covenant Transportation Group shares are held by company insiders. Comparatively, 2.4% of Canadian National Railway shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Dividends

Canadian National Railway pays an annual dividend of $1.30 per share and has a dividend yield of 1.6%. Covenant Transportation Group does not pay a dividend. Canadian National Railway pays out 33.3% of its earnings in the form of a dividend. Canadian National Railway has increased its dividend for 5 consecutive years.

Summary

Canadian National Railway beats Covenant Transportation Group on 12 of the 17 factors compared between the two stocks.

About Covenant Transportation Group

Covenant Transportation Group, Inc. is a provider of expedited long haul freight transportation, primarily using two-person driver teams in transcontinental lanes. The Company’s services also include refrigerated, dedicated, cross-border, regional and brokerage. The Company’s segments include Truckload and Other. The Truckload segment includes the operations of Covenant Transport, Inc. (Covenant Transport), its flagship operation, which provides expedited long haul, dedicated, temperature-controlled and regional solo-driver service; Southern Refrigerated Transport, Inc. (SRT), which provides primarily long haul, regional, dedicated and intermodal temperature-controlled service, and Star Transportation, Inc. (Star), which provides regional solo-driver and dedicated services, primarily in the southeastern United States. The Company provides truckload transportation services throughout the continental United States, into and out of Mexico, and into and out of portions of Canada.

About Canadian National Railway

Canadian National Railway Company is engaged in the rail and related transportation business. The Company’s network of approximately 20,000 route miles of track spans Canada and mid-America, connecting approximately three coasts, including the Atlantic, the Pacific and the Gulf of Mexico and serving the cities and ports of Vancouver, Prince Rupert (British Columbia), Montreal, Halifax, New Orleans, and Mobile (Alabama), and the metropolitan areas of Toronto, Edmonton, Winnipeg, Calgary, Chicago, Memphis, Detroit, Duluth (Minnesota)/Superior (Wisconsin), and Jackson (Mississippi), with connections to all points in North America. Its network and connections to all Class I railroads provide its customers access to the three North American Free Trade Agreement nations. It carries over 300 million tons of cargo, serving exporters, importers, retailers, farmers and manufacturers. Its freight includes seven commodity representing a portfolio of goods.

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